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Monday, July 16, 2018

Airlines unbound,fliers in a bind?

But this has really caught on in the West.

Written by Anil Sasi | Published: May 17, 2013 3:08:14 am

In India,the concept of domestic airlines unbundling services — including preferential seating and check-in baggage — and charging separately for these,is still in its early days. But this has really caught on in the West. In the US,for instance,airlines are estimated to have collected more than $6 billion in baggage and reservation change fees from passengers last year,the highest amount since these add-on charges became the norm five years ago. In fact,these fees — along with extra charges for boarding early or picking prime seats — have helped return the aviation sector in the US to profitability.

The entire idea of this unbundling of fares is to give the passenger the discretion to decide the add-on service that he or she wants while taking a flight,even as airlines correspondingly cut down on their base fares. According to a November 2011 American Aviation Institute study,the unbundling trend in the US has had profound positive impact for the consumer. Base airfares are less expensive (on an inflation-adjusted basis) than in 2001. In 2001,the inflation-adjusted average base fare per passenger segment flown by major carriers was $164,versus $158 in 2010.

But a free hand to airlines on charging these frills could also prompt responses that border on the ridiculous,as was the experience with Ryanair,Europe’s largest budget carrier. In 2010,the airline said it was looking at charging passengers for using the toilet,in a bid to limit the facilities on planes and replace them with extra seats. The plan was reportedly shot down by the regulator,following an outcry among consumer groups in Ryanair’s home base of Ireland and other EU countries.

While in the US and Europe,consumers have recourse to quick and effective legal intervention in case of any malpractice — which has largely helped check cartelisation,overcharging and proposals such as the one floated by Ryanair — for Indian consumers the avenues are far more limited. So in that sense,when domestic airlines here choose to put a “premum” price tag on all its seats,including even the middle seats,or prune the free baggage entitlements without bringing down the base fares,Indian consumers have far fewer options for redressal.

In that respect,the role of the aviation regulator in India becomes that much more crucial. Without being over-intrusive,the directorate general of civil aviation needs to keep a close eye on how airlines exercise their new-found freedom on these unbundled services,a move that was ushered in rather abruptly by the civil aviation ministry,without any public discourse or stakeholder inputs. The consumer,at the end of it all,should not be left high and dry.

Anil is a senior editor based in New Delhi.

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